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1999-2: 1993 Candidate May Not Raise Contributions Exceeding Contribution Limit for the Purpose of Retiring Outstanding Liabilities from the 1993 Elections

January 07, 1999

Re: Administrative Code §3-703(1)(f); Campaign Finance Board Rules 1-04(c)(1), (g)(4)-(6), (m); 3-02(b); Op. No. 1999-2

An advisory opinion has been requested on behalf of Committee for David Dinkins II (the "Committee"), the Committee authorized by and acting on behalf of David N. Dinkins in his 1993 re-election campaign for Mayor1. The request states:

At the conclusion of the 1993 campaign, the Committee had outstanding obligations that could not be met. Some of those obligations remain outstanding today2.

We request an advisory opinion determining whether, more than five years after the conclusion of the 1993 election, we can seek funds from individuals and entities who have previously contributed the maximum amount permitted under the provisions of the New York City Campaign Finance Act in effect at the time of the election for the sole purpose of paying obligations incurred in connection with the 1993 campaign. None of the money raised will be used for any purpose other than to pay off the previously existing obligations.

The contribution limit prescribed by the Campaign Finance Act for participating candidates for Mayor in the primary and general elections held in 1993 was $6,500. Former New York City Administrative Code §3-703(1)(f)3. (Abiding by the contribution limits of the Act is one of the conditions explicitly agreed to by candidates who join the voluntary Campaign Finance Program.) The acceptance and deposit of contributions exceeding the applicable limit in effect is prohibited, and accordingly, excess contributions must be returned to the contributor. Campaign Finance Board Rule 1-04(c)(1); see also Advisory Opinion No. 1993-8 (July 20, 1993). Post-election contributions accepted to pay debt from that election are subject to the contribution limits applicable in that election. Rule 1-04(m). While the Committee was not required to file disclosure statements with the Board after July 15, 1994, it remains subject to all other Program requirements for the 1993 elections, including the Act's contribution limits. See former Rule 3-02(g), recodified in Rule 3-02(b).

The Board recognizes the potential difficulties the Committee faces in attempting to reduce a large outstanding debt more than five years after the election. Indeed, ongoing efforts to reduce the debt are themselves necessary to maintain compliance with the Act's contribution limits pursuant to Rule 1-04(g)(4)-(6) (describing when debt and other extensions of credit will be treated as contributions, subject to the Act's limits).

Other jurisdictions have addressed similar issues, consistently finding that contribution limits remain applicable to post-election contributions to pay off debts. See, e.g., New York State Board of Elections 1978 Opinion No. 3 (undated); Federal Election Commission ("FEC") Advisory Opinions No. 1993-19 (November 15, 1993) (nine-year-old debt) and No. 1985-2 (February 22, 1985) (six-year-old debt); New Jersey Election Law Enforcement Commission Advisory Opinion No. 05-1994 (June 17, 1994) (one-year-old debt). The FEC has found that to allow a waiver of the $1,000 per election contribution limit would undercut the protections against undue influence that the federal contribution limits were designed to prevent. FEC Advisory Opinion No. 1993-19, supra4 ("removing the limits would be contrary to the plain wording of the statute as well as some of the basic principles underlying the Act and the public financing statutes"); see also FEC Advisory Opinion No. 1998-20 (November 4, 1998) and FEC Advisory Opinion No. 1985-2, supra. On the other hand, the FEC has waived the $50,000 limit on the use of a candidate's personal funds which is applicable only to Presidential candidates receiving public matching funds. FEC Advisory Opinions Nos. 1993-19, and 1998-20, supra5.

The contribution limits of the Act are distinguishable from most contribution limits in other jurisdictions because they are voluntarily assumed by candidates joining the Campaign Finance Program6. If Mr. Dinkins had not joined the Program, the Committee would have been permitted to accept as much as $100,000 per contributor for the 1993 primary and general elections pursuant to New York State law in effect at that time. See Chapter 79 of the Laws of 1992 § 24, amending Election Law §14-114(1)(b) (lowering the $100,000 limit to $37,000), and §33(b) (delaying the effective date of the $37,000 limit until January 1, 1994). If the Act's contribution limits were waiveable, presumably this $100,000 State law contribution limit would become operative.

The New York City Campaign Finance Act was adopted, inter alia, "to reduce improper influence on local officers by large campaign contributors." Local Law No. 8 of 1998 §1. When a candidate is not, and will never again be, a candidate for public office or an elected official, it may be argued that application of the Act's contribution limits no longer serves the legislative purposes of the Act. The Act does not, however, provide for any circumstances under which the contribution limit may be waived. In addition, it is unclear what limit, if any, the Committee would be subject to, unless it is the $100,000 limit applicable under State law. Permitting candidates to retire debt — even long after the fact — by reverting to State law contribution limits far exceeding those of the Campaign Finance Act could spur influence-peddling abuses during the election year. For example, candidates might seek the promise of large post-election contributions and incur excessive campaign debts, in anticipation of an ultimate waiver permitting the use of large contributions to pay off these liabilities. This potential scenario sets to rest any question how, as a matter of policy, the Campaign Finance Act contribution limits must apply.

Indeed, the public has a considerable stake in seeing that binding undertakings made pursuant to the Act, as a condition for receiving public funds, are carried out. Safeguarding the integrity of the contribution limits of the Act is fundamental for maintaining public confidence in the City's voluntary campaign finance reform.

The Board has no authority under the Act to waive the $6,500 contribution limit or to provide the relief sought by this request. The Board is nonetheless cognizant of the problems participating candidates encounter in retiring their campaign debts and believes this subject merits attention in the legislative process, in the context of the public policy issues discussed in this opinion.



1 The request was made by Henry T. Berger, counsel to the Committee, in a letter to Nicole Gordon dated December 1, 1998.

2 The last statement filed by the Committee with the Board of Elections, dated July 15, 1998, indicates that the Committee had unpaid bills totaling more than $222,000.

3 The contribution limits of the Act applicable in future city-wide elections were recently reduced to $4,500. Administrative Code §3-703(1)(f), as amended by Local Law No. 48 of 1998 §1.

4 The FEC has emphasized that the "waiver requested by Dr. Fulani (and denied to Senator Glenn) FEC Advisory Opinion No. 1993-19 pertains to a provision of federal law that is binding on all candidates, regardless of whether they are publicly funded. This provision pertains directly to the issue of the undue influence that federal law is designed to prevent." FEC Advisory Opinion No. 1998-20, supra.

5 As stated in FEC Advisory Opinion 1993-19, "the Commission notes the truly singular situation presented in your request, the passage of nearly ten years since the debt was incurred, the size of the obligation, and the fundraising efforts made to retire the debt. Therefore, the Commission concludes that in these exceptional circumstances, Senator Glenn may now spend an unlimited amount of his personal funds for the purpose of retiring the committee's debt."

6 The $50,000 personal funds contribution limit applicable to publicly financed Presidential candidates is analogous to the Act's contribution limit in that it is voluntarily assumed by candidates seeking public funds.